Pa. budget is signed, but GOP rift deepens

Pennsylvania Gov. Tom Corbett fields questions from the media during a news conference Thursday, July 10, 2014, in Harrisburg, Pa. Corbett, who signed state budget documents earlier in the day, is vetoing millions of dollars from the Legislature's budget and urging lawmakers to make a new effort to address public-sector pensions. (AP Photo/Bradley C Bower)

Pennsylvania Gov. Tom Corbett holds up the state budget documents he signed in his chambers Thursday, July 10, 2014, in Harrisburg, Pa. Corbett is vetoing millions of dollars from the Legislature's budget and urging lawmakers to make a new effort to address public-sector pensions. (AP Photo/Bradley C Bower)

HARRISBURG — Gov. Tom Corbett signed a $29 billion state budget on Thursday — 10 days late — but his showdown with the General Assembly over pension reform is far from over.

Corbett used a line-item veto to slash $65 million from the Legislature’s appropriation and chided lawmakers for increasing their $320 million budget by 2 percent and including $5 million to pay for their parking. He also slashed more than $7.2 million in other spending allocations.

If those actions don’t indicate how Corbett feels, the governor made clear he’s not happy that lawmakers left Harrisburg without addressing public pensions, which are chewing away 60-cents of every new dollar the state collects, Corbett said.

“This is a reform that has been debated across this state and in the halls of this building for three years now,” Corbett said. “It’s time to stop talking around the edges and enact meaningful reform.”

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All of it has made for a bizarre family feud, considering Republicans control the governor’s office, the state Senate and the state House. Corbett’s decision touched off a flurry of reaction, which included Republican House and Senate leaders accusing him of playing politics with the budget.

House Leader Mike Turzai, R-Allegheny, said the chamber is “close” to completing pension reform and defended the House’s record in passing legislation that would privatize the state’s liquor system, allow school districts to replace property taxes with an elimination tax and reduce the size of the Legislature.

With those items stalled in the Senate, Turzai said he’d like Corbett to use his “bully pulpit” and political capital to move them ahead.

“You can’t lead from behind. You’ve got to lead out front,” Turzai said.

The three top Republicans in the state Senate — Sens. Joe Scarnati, Dominic Pileggi and Pat Browne — released a joint statement that said, “We are disappointed that the Governor has not, to date, been able to work effectively with the Republican majorities in the House and Senate to address important fiscal issues impacting our state.

The trio voiced concern that the Senate couldn’t “function as a central figure in the legislative process with $30 million being stripped from our reserves.” They added that it was “horribly concerning” that Corbett vetoed funding for educational programs and job-training programs, among other programs.

“We are not aware of, and the Governor has not explained the link between the elimination of funding for these programs, along with the (Legislature) and achieving our mutual goal of public pension reform,” the Senate leaders said. “While we share the desire to enact statewide pension reform, linking pension reform to punitive program cuts is not a successful strategy.”

The statement also pointed to the fact the Senate unanimously approved legislation that would move the state’s elected officials into a defined contribution pension plan.

Corbett has said that isn’t enough. Officials who push that strategies or plans to increase revenue to feed rising pension costs “are doing nothing except standing with special interests,” the governor said, poking both lawmakers and public-sector labor unions at the same time.

Labor unions that oppose pension reform are “out of touch,” Corbett said, pointing to an email in which the Pennsylvania State Education Association praised its members for stopping legislation that would move newly hired state workers and teachers into a hybrid retirement plan that includes elements of a traditional pension and a 401(k)-style plan.

“What we have are special interest groups that are taking credit, blocking legislation that would help the people of Pennsylvania, the property owners of Pennsylvania,” Corbett said. “That’s what’s getting lost in all of this — the property owners of Pennsylvania.”

The email, which PSEA President Mike Crossey sent last week, pointed out the pension reform legislation circulating in the General Assembly does not address the state’s $50 billion unfunded pension debt.

“Even when Gov. Corbett threatened to take hostages — school funding for Philadelphia and the budget itself — in order to get this bad pension bill passed, lawmakers from both parties stood on principle and refused to give in,” Crossey wrote in the email. “In the end, leaders in both the Pennsylvania House of Representatives and Senate adjourned for the summer without voting on it.”

“This happened because of YOU,” Crossey wrote later.

Along with the debt, PSEA spokesman David Broderic said the union also objects to the plan because it “destroys” retirement security for young employees and “hardly saves any money” in the long term.

The Public Employees Retirement Commission has indicated that could save about $11 billion over the next three decades, though most of that won’t occur for more than 20 years. It doesn’t offer immediate relief, a sticking point among opponents of the legislation.

“The governor can try and blame anyone he wants, but the fact remains that his misguided pension plan didn’t pass because it’s a bad plan,” Broderic said, explaining the union wasn’t taking credit for pension reform stalling, but rather was “commending” members for standing up for the middle class.

The barbs directed at Corbett came from all sides, and they weren’t always directed at pensions.

Democratic Auditor General Eugene DePasquale said Corbett should have vetoed the entire budget, warning the spending plan built on one-time transfers and rosy revenue projections might not be sustainable.

“I guarantee that by the mid-year budget review, everyone will regret this budget becoming law,” he said.

Still, Corbett signed a no-new-taxes budget and made his stand on pensions at the same time, even though it meant kicking dirt on lawmakers in his own party. He left open the possibility he’d try to force the General Assembly away from the beach and back to Harrisburg for a special session this summer.

Some legislators, though, weren’t offended.

While echoing Corbett’s critiques of public-sector unions — calling the PSEA “the enemy of everybody” — state Sen. Scott Wagner, R-York, praised the line-item veto and said it could help prompt pension reform.

“There might be a shot here. The governor drew the line in the sand,” Wagner said. “If I was the governor, I would have vetoed the whole budget, and I’d have a special session. I would pull everybody back and you’d work all summer until something gets done.”

Staub can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.